-Caveat Lector- What We Fail to Grasp: The U.S. Shouldn't Lose Control of This Spying Technology By Alan Tonelson Sunday, January 7, 2001 Page B05 When Dick Cheney and Colin Powell were overseeing U.S. military operations during the Persian Gulf War in 1990-91, much of their intelligence data on Saddam Hussein's forces was the result of technology that came from Tinsley Laboratories of Richmond, Calif. Tinsley has been the sole manufacturer of many of the state-of-the-art mirrors and lenses in the high-powered cameras carried by America's spy satellites -- systems that the Clinton administration has called "among the most valuable U.S. national security assets." The U.S. government has long sought to restrict foreign access to this technology. But that's about to change. As Cheney, Powell and the rest of the Bush team prepare to take office, Tinsley's parent company, Silicon Valley Group Inc., is scheduled to pass into foreign hands. Unless the Clinton administration acts by Friday, its legal authority to hold up the proposed sale will expire, and the U.S. manufacturer will become part of a Dutch company, ASM Lithography. Since ASM announced its acquisition of SVG/Tinsley in October, President Clinton's leading national security advisers have not shown much interest in closely reviewing the acquisition. Some career government officials are saying privately that their superiors do not seem adequately focused on determining whether foreign ownership of SVG/Tinsley will damage U.S. security interests. Last week, the issue got the attention of Sen. Robert F. Bennett (R-Utah). He asked Treasury Secretary Lawrence H. Summers -- whose department heads an interagency committee charged with evaluating the impact of such takeovers on national security -- to authorize a full investigation of the acquisition. Ordering such an investigation would have the effect of delaying the sale for at least 45 days -- enough time for the new administration to block the deal if such a step proves necessary. It will also give President-elect Bush a chance to show that he is serious about rebuilding the U.S. military and maintaining control over its high-tech foundations. The Treasury-headed interagency group -- known as the Committee on Foreign Investment in the United States (CFIUS) -- began a routine review of the SVG/Tinsley acquisition on Dec. 13. Since the committee was created in 1988, it has reviewed some 1,400 proposed deals. During the Clinton years, however, the panel has never blocked a deal (only one was nixed during the elder Bush's administration) and has conducted only about a dozen full-scale investigations of the kind sought by Bennett. Although the Netherlands plainly deserves its reputation as a loyal NATO ally, some U.S. defense and intelligence officials worry that ASM's far-flung global operations and corporate alliances with companies like Germany's Carl Zeiss and Schott Glass could make it more difficult to keep SVG/Tinsley's advanced optics and lithography capabilities from migrating to unfriendly countries. The sale also raises other policy questions -- mainly, should an American company be sold to foreign entities for private gain when it has benefited from U.S. government contracts and assistance totaling hundreds of millions of dollars? Since 1997, Tinsley has been owned by SVG, one of the world's leading producers of the manufacturing equipment that helps build semiconductors, the silicon chips integral to computers and other electronic equipment. Tinsley's strength in producing advanced optics made its acquisition by SVG a natural; the most critical phase of chip making (called lithography) involves using microscopic beams of light to etch equally microscopic circuit patterns onto silicon wafers. SVG/Tinsley is understandably a tempting takeover target for ASM, a lithography giant that lacks such leading-edge technologies. SVG/Tinsley's technologies are found throughout the U.S. military's highest tech systems, and are crucial to the Pentagon's future plans. In addition to strengthening the U.S. reconnaissance network, the company's optics are used in the lasers in missile defense systems being developed by the U.S. government's nuclear weapons labs at Livermore, Calif., and Sandia, N.M. Tinsley also engineered the optics package that put NASA's malfunctioning Hubble space telescope back in business. Moreover, SVG/Tinsley's capabilities are at the heart of a government-business partnership to create the next generation of lithography technology, a breakthrough urgently needed because current chip-making machines are nearing the physical limits of their ability to place more computing power onto each chip. Without access to the best possible semiconductor manufacturing equipment, the U.S. military may not enjoy exclusive access to the world's most advanced computer chips. Save for one small niche supplier, Ultratech Stepper in San Jose, Calif., SVG is the last remaining American-owned lithography company. Indeed, in 1996, the Clinton administration helped the company avoid a takeover by Canon, the Japanese electronics and lithography giant. Sounding the alarm about the Dutch buying up American high-tech companies seems almost comical. But as the U.S. government has learned in recent decades, Japan and some of our NATO allies seem to underestimate or overlook the dangers of selling technology to nations that are often hostile to Western interests, such as Libya, Iraq, Iran and North Korea. ASM, for example, works closely with Taiwanese semiconductor manufacturers, who are sending increasingly advanced production capability to China. In addition, the company procures major components for its lithography machines from optics maker Carl Zeiss, which has offices and outlets in Libya, Syria, China and India -- whose nuclear weapons programs have so troubled Washington. Of course, American-owned companies can neglect national security concerns, too -- just consider defense contractor Lockheed, which was fined $13 million last year for aiding China's satellite program. And many U.S. high-tech manufacturers share technology with Taiwanese partners as well. But unlike their foreign counterparts, American-owned firms are at least subject to U.S. export control laws. These laws govern ASM's activities in the United States, including its participation in the next-generation lithography project at the nuclear weapons labs. But American regulation will be practically irrelevant if ASM moves SVG/Tinsley facilities overseas -- as it would be free to do -- or claims that new products are based on breakthroughs made by, say, partner Zeiss in one of its foreign facilities. It is important to note that both SVG and Tinsley owe much of their prowess to U.S. government support. Since 1987, Washington has spent more than $1 billion to ensure the survival of a world-class U.S.-owned and U.S.-based lithography industry. Government technology officials estimate that SVG and Tinsley have received tens of millions of dollars in taxpayer funds, and SVG's current superiority in lithography and advanced optics stems in part from its use of special testing equipment developed at the Livermore National Lab. SVG also has been able to spearhead the new lithography equipment effort partly because its membership in the next-generation partnership has given it access to the innovative know-how and superior technology of the U.S. national labs. Past foreign takeovers of U.S. technology stars have sometimes been approved because the American firm was weak financially. But SVG is a healthy company, with earnings of $46.8 million in fiscal 2000, and sales that rose 78 percent, to $842.3 million. President-elect Bush and his advisers speak more often than did their predecessors of the need to balance America's interests in open markets and free trade with national security concerns. Reviewing the SVG sale with a fine-toothed comb is the right place to start, and President Clinton's team should give them the opportunity. Alan Tonelson is a research fellow with the U.S. Business and Industry Council Educational Foundation, a business-affiliated research group. His book on globalization, "The Race to the Bottom" (Westview Press), was published in the fall. ================================================================= Kadosh, Kadosh, Kadosh, YHVH, TZEVAOT FROM THE DESK OF: *Michael Spitzer* <[EMAIL PROTECTED]> ~~~~~~~~~~~~~~~ The Best Way To Destroy Enemies Is To Change Them To Friends ================================================================= <A HREF="http://www.ctrl.org/">www.ctrl.org</A> DECLARATION & DISCLAIMER ========== CTRL is a discussion & informational exchange list. Proselytizing propagandic screeds are unwelcomed. Substance—not soap-boxing—please! 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